National Council for Governors chairman Isaac Rutto speaks during a meeting with governors in Nairobi last month. FILE
What you need to know:
Leaders want new law to enable them to issue bonds and access bank loans.
They also plan to petition the central government to offer guarantees to the planned debt instruments such as county bonds to be sold to the public.
Governors are seeking the abolition of an order barring them from borrowing funds from banks, pension firms and other investors as they gear up to issue debt to supplement allocations from the central government.
The governors said a retraction of the barrier by the Commission for Revenue Allocation would pave the way for Parliament to pass a new law enabling them to issue bonds and access loans from pension funds and banks.
“That the caveat placed by CRA on non-borrowing be removed to allow for implementation of infrastructure development within the five year period,” reads part of a statement signed by the chairman of National Council for Governors, Isaac Rutto on Friday.
The leaders also plan to petition the central government to offer guarantees to the planned debt instruments such as county bonds to be sold to the public.
The extra funding options would open an additional window for each devolved government to align its finances to unique local needs that cannot be met by transfers from the national government alone.
“Having recognised that funding from the national and county governments was inadequate ... it was unanimously agreed that alternative sources of funding would be considered from donors, lenders, and other investors,” the statement reads.
The governors said there is need to establish a loans and grants council to assist counties’ fundraising efforts. The leaders resolved to undertake feasibility studies to assess infrastructure needs of all counties and projects to be funded by pension schemes, donors, and other investors.
Street lighting
They cited housing, office blocks, parking, and street lighting as some of the developments that they want to be prioritised in the government’s medium term plans.
Governors are also pushing for changes to the Public Private Partnership Act 2013 to allow them to enter into joint ventures with private investors in specific projects. The law currently envisages such projects being undertaken by national State agencies which may be offered guarantees by the Treasury.
PPPs are seen as important in implementing expensive projects like roads where private investors operate the projects for a defined period before handing them back to the contracting authority.
The leaders’ calls for more funding options coincided with President Uhuru Kenyatta’s signing of the CDF Act 2013 into law, allowing for the release of Sh53 billion to constituencies.
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